In a new episode of Talking Economics, CERGE-EI Assistant Professor Achim Ahrens discusses what economic research tells us about migration, refugees and access to work in receiving countries. Speaking with host Katarina Stehlíková Štěpánková, Ahrens explains that the labour market effects of migration are highly context-dependent. While public debate often assumes that migration automatically lowers native wages or employment, empirical research points to a more nuanced picture.

How does migration affect labour markets and economies in the receiving countries? What does the research consensus actually look like, beyond the headlines?

That’s indeed one of the central questions in the public debate. And unfortunately, there is no consensus. From the economic point of view, the textbook model would say: if there is more immigration, you have more labour supply, so wages would go down and native workers would compete with arriving immigrants. If you look at this empirically, it seems to be much more complicated. There is no empirical consensus.

I’ll just give two examples. One is based on a study about cross-border workers from the Czech Republic to Germany. After the fall of the Iron Curtain, Czech workers were able and allowed to work in Germany. So they were cross-border workers, not traditional immigrants, but the case helps us understand the effect of immigration on wages. It was a very sudden inflow of Czech workers into German border regions, and the share of Czech workers in those regions went up from 0 to 3%. There was a very modest reduction in native wages, but a quite noticeable reduction in the employment of Germans — not so much through layoffs, but through fewer new hires of German workers.

“It depends on the setting — on whether there are shortages of particular groups of workers, and on how sudden and unexpected the change is.”

Another case study is Switzerland. In the early 2000s, Switzerland gradually opened its labour market to cross-border workers from EU countries. That was a different setting — the change was much more gradual, step by step, so it was anticipated. On average, the research didn’t find any significant effects on wages and employment. But among the highly educated, wages actually increased. The reason seems to be that firms expanded to meet a shortage of high-skilled labour, so the effects of this opening were actually very positive in the end.

So these two examples really show that it depends on the setting — on whether there are shortages of particular groups of workers, and on how sudden and unexpected the change is.

Why Refugees Are Different from Other Migrants

Refugees are often discussed together with other migrants, but their situation is different. Can you explain the difference between a refugee and a regular migrant, and why does it matter?

There is first a legal difference. Refugees are migrants who flee persecution in their country of origin, often because of conflict. They receive protection under the Geneva Convention or under other subsidiary or temporary protection schemes. This is different from economic migrants, who move voluntarily, typically for work or family reasons. Many economic migrants already have a particular job in mind when they arrive, and they are positively self-selected in the sense that they come with skills that are more likely to match the local labour market.

There is also the special case of Ukrainians, which we can talk about. They enjoy a special protection status in the EU under the Temporary Protection Directive.

The main difference is really about selection. Economic migrants are self-selected for labour market success — many have a contract before arrival. Refugees, by contrast, are not economically self-selected; their timing and destination are largely outside of their control.

Other relevant factors are trauma and mental health. One figure is that more than 60% of adult refugees in Germany have reported some form of violence, and many suffer from PTSD and depression, which also affects their labour market potential.

“Employment among refugees does grow quickly after that, but it takes a very long time to catch up with regular migrants.”

And another aspect is uncertainty about the right to stay. Many refugees — and this also applies to Ukrainians — have only a temporary right to stay. Ukrainians in the EU are currently expected to be allowed to stay until March 2027, which may be extended but is not certain. That uncertainty affects the willingness and ability to invest in language skills and in host-country-specific qualifications.

Refugee Employment Takes Time to Catch Up

How do refugees fare in the European labour market?

The pattern is relatively consistent across European countries. Within the first one to two years after arrival, refugee employment is very low — often below 20%. Many are still in a kind of limbo and have no employment at all. This compares to 50–70% or even higher employment rates for regular, economic immigrants. That’s partly because many economic migrants arrive with a contract or with a clear plan to work in a particular industry or occupation.

Employment among refugees does grow quickly after that, but it takes a very long time to catch up with regular migrants. Even after ten years, we see a gap in the data.

 Studying Refugee Policy in Switzerland

Your research focuses mainly on Switzerland. Can you tell us more about the questions you’re asking about refugees in Switzerland, and why Switzerland?

I have one particular study with colleagues from ETH Zurich — Andi Beerli, Dominik Hangartner, Selina Kurer, and Michael Siegenthaler. We asked the question: how much does the policy framework that refugees face contribute to the gap in employment and wages between refugees and other immigrants or natives with similar characteristics?

These policies are quite significant, because in most countries refugees are constrained in terms of which jobs they can take. In this paper, we study four policies.

The first is an employment ban — in the first months after applying for asylum, refugees are banned from taking up employment. That policy exists in Switzerland but also in many other countries.

The second is a prioritisation policy. If a firm in Switzerland wants to hire a refugee, the employer is required — depending on the refugee’s permit status — to provide evidence that no Swiss resident or native worker was available for the position.

Third, there are sector restrictions. In particular cantons, refugees are banned from working in specific industries.

And fourth, there are geographic restrictions. Depending on the canton you live in, you may not be able to obtain a work permit in another canton.

Switzerland is ideal for studying this because it has a strong federal system with 26 cantons, which have substantial autonomy over which policies they choose to implement.

Restrictions Have Long-Term Consequences

So what do you find? Are these restrictions harmful?

We find that all four policies — the employment ban, the prioritisation of residents, and the sector and regional restrictions — reduce the employment and earnings of refugees. Taken together, moving from the least to the most restrictive regime accounts for seven percentage points in employment probability. That’s quite severe, given that in the first five years — the period we’re looking at — the overall employment share is around 20%. Seven percentage points that could move up or down because of these policies is a lot.

And these policies don’t just have immediate effects — they also have long-term consequences. Even once the restrictions cease to apply, they keep affecting the career trajectories of refugees. We find negative effects on employment chances and earnings up to seven years after the restrictions are lifted, because the restrictions made it more difficult to build a career and integrate.

Ukrainians in Czechia and Switzerland

Czech Republic has received a large number of Ukrainians since the start of the war. Can you compare the situation here to what’s happening in Switzerland?

That’s an interesting comparison. The employment rate among Ukrainians is much higher in Czechia than in Switzerland. In Switzerland, only around 35–40% of Ukrainians are currently in employment, whereas in the Czech Republic that figure is, I believe, around 70% or higher.

“Language is one of the main drivers of the gap, but there are likely other factors as well.”

Some of this is clearly about context. Many Ukrainians already had pre-existing networks in the Czech Republic before the war, and we know from the literature that having friends or family already in the destination country helps with job finding and integration. Language similarity also plays a major role.

There are probably other factors too. In Switzerland, at the start of the displacement, cantonal authorities required employers to register a hire even before it happened — an additional administrative burden that may have slowed employment. In Czechia, that requirement didn’t exist.

Childcare is also cited as a major obstacle in Switzerland, given the large share of women with children among Ukrainian refugees.

If I had to guess — and this genuinely needs more study — I think language is one of the main drivers of the gap, but there are likely other factors as well.

 In terms of policies, do you think the Czech Republic has been more open or less restrictive than Switzerland?

It did seem to make things somewhat easier from the start. Though what seems to be more of a challenge in the Czech Republic is a quantity-versus-quality issue: while many Ukrainians are employed, they often work in jobs that are below their skill level. More can be done on that front.

Toward a More Evidence-Based Debate

What would you like to share as your final reflections?

I think it’s important to look at the data and examine the issue in a fact-based way — to ask honestly what the advantages and disadvantages of immigration are, which policies pay off and which do not. There should be a more evidence-based debate around this.

Explore the full conversation in the latest episode of Talking Economics here.